2427 + Interview Questions in Accounts in Class 11 Page 29 InterviewSolution

1401.	If Depreciation reduces, profits and Value of fixed assets and thus, the capital of the owner, why do businesses charge Depreciation?
Answer» Solution :FINANCIAL Statements MUST show a true and fair view of the financial performace and ALSO financial position of the business. If Depreciation is not CHARGED, both PROFITS and fixed assets would be stated at inflated amounts. This will mislead the users of Financial Statements.

Discussion

1402.	If Depreciation reduces profit, reduces Book value of assets and also reduces capital of the proprietor, then why do enterprises provide Depreciation ?
Answer» Solution :DEPRECIATION, is allocation of cost of fixed assets in a systematic manner over their estimated useful life. It is thus, a cost. Financial Statements must be show true and fair view of the financial PERFORMANCE and position of the business. If depreciation is not PROVIDED, both fixed asset and profit will be shown at higher amounts.

Discussion

1403.	If debit side of a Trading Account is bigger, does it mean the enterprise has earned profit or incurred a loss? Why?
Answer» Solution :It MEAN the BUSINESS has incurred loss as revenues are credited WHEREAS EXPENSES are DEBITED.

Discussion

1404.	If debit side of Profit and Loss Account is bigger than credit side, does it mean net profit or net loss ? Why?
Answer» Solution :It means NET loss. It is so because all incomes and GAINS are credited while all expenses and losses are debited. If total of debit side (EXPENSE) is more than the total of credit side (INCOME), it will RESULT in loss

Discussion

1405.	If credit side of a Trading Account is bigger than the debit side, does it mean the enterprise has incurred loss or earned profit ? Why?
Answer» SOLUTION :It means the business has earned profit as revenues are credited whereas expenses are DEBITED.

Discussion

1406.	If credit side of Profit and Loss Account is bigger than the debit side, does it mean net loss or net profit ? Why?
Answer» Solution :It means net profit. If is so because all INCOMES and gains are credited while all expenses and losses are DEBITED. If total of credit SIDE (income) is more than the total of debit side (expense), it will RESULT in profit

Discussion

1407.	If Closing Stock is given outside the Trial Balance, where is it shown in the Finanical Statements or Final Accounts ?
Answer» Solution :Closing Stock given OUTSIDE the Trial Balance is SHOWN on the CREDIT side of the Trading Account and on the ASSETS side of the Balance Sheet under the main head CURRENT Assets.

Discussion

1408.	Ifcapitalof a business is â‚¹1,40,000 and liabilities are of â‚¹80,000, calcluate the total assets of the business.
Answer» ANSWER :TotalAssest â‚¹2,20,000

Discussion

1409.	If Closing Stock appears in the Trial Balance , it means
Answer» pruchases are ADJUSTED against opening and closing STOCKS. PURCHASE are adjusted against closing stock Both (a) and (b) NONE of the above. Solution :pruchases are adjusted against opening and closing stocks.

Discussion

1410.	Ifcapitalof a business is ₹1,40,000 and liabilities are of ₹80,000, calcluate the total assets of the business.
Answer» ANSWER :TotalAssest ₹2,20,000

Discussion

1411.	If both debit and the credit aspect of a transaction are recorded in the cash book itself , it is called
Answer» an OPENING ENTRY a COMPOUND entry a tranfer entry a CONTRA entry SOLUTION :a contra entry

Discussion

1412.	If Capital and Revenue Expenditure are not distinguished
Answer» NET PROFIT will not be correct financial POSITION will not be correct both (a) and (B) NONE of these Solution :both (a) and (b)

Discussion

1413.	If balance in the bank statement shows ₹ 3,000 (Dr.) and there are deposits of ₹ 800not yetcredited and unpresented cheques totalling ₹ 500, the balance in the Cash Book should be
Answer» ₹ 3,300 (CR.) ₹ 2,700 (Cr.) ₹ 4,300 (Cr.) ₹1,700 (DR.) SOLUTION :₹ 2,700 (Cr.)

Discussion

1414.	If both Adjusted Purchases and Closing Stock are given in the Trial Balance, where are the two accounts shown in the Final Accounts ?
Answer» Solution :ADJUSTED Purchases are shown in the Trading ACCOUNT on the debit side. Closing STOCK is shown on the assets side of the BALANCE Sheet under main head CURRENT Assets.

Discussion

1415.	If amount of any known liability is not known, it is accounted in the Books of Account as
Answer» a Liability a PROVISION a reserve None of these SOLUTION :a provision

Discussion

1416.	If amount of any known liability is known, it is accounted in the Books of Account as
Answer» a LIABILITY a provision a reserve None of these SOLUTION : a Liability

Discussion

1417.	If a transactions has theeffect of decreasingan asset, is thedecrease recorded as a debit or as a credit? If thetransaction has the effect of decreasing a liability , is thedecrease recorded as a debit or as a credit ?
Answer» SOLUTION :Decrease in Asset will be RECORDED on credit SIDE. Decrease in LIABILITY will be recorded on debit side.]

Discussion

1418.	If 'Adjusted Purchases' and 'Closing Stock' are given in the Trial Balance, will you transfer 'Closing Stock' to Trading Account? Given reason
Answer» SOLUTION :No. CLOSING STOCK will not be transferred to Trading Account because it already stands credited to Trading Account as Adjusted Purchases mean OPENING Stock + Purchases (Net) - Closing Stock

Discussion

1419.	If accounting information is based on facts and it is verifiable by documents ithas the quality of ………
Answer» Relevance Reliability Understandability Comparability Answer :B

Discussion

1420.	If adequate maintenance expenditure is incurred, depreciation need not be charged.
Answer» SOLUTION :F

Discussion

1421.	If a Trial Balance does not agree, the difference must be entered in (i) the Profit and Loss Account, (ii) a Suspense Account, (iii) a Nominal Account and (iv) the Capital Account. Give reasons.
Answer» Solution :(ii) A Suspense Account. Because the difference in a Trial BALANCE when LOCATED will be debited or credited to Suspense Account Which ultimately should BECOME NIL.

Discussion

1422.	If a transaction is properly analysed and recorded:
Answer» Only two accounts will be used to RECORD the transaction. One ACCOUNT will be used to record transaction. One account BALANCE will increase and another will decrease. Total amount debited will equals total amount credited. Solution :d

Discussion

1423.	If a partner takes goods for personal use or goods are given as charity, why Input GST (CGST and SGST or IGST) Account is credited?
Answer» Solution :It is CREDITED because at the time of purchase GST Paid on these GOODS was debited to Input GST (CGST and SGST or IGST) Account. The goods are not sold but have reached their final destination, i.e., will not be sold further. Therefore, GST (CGST and SGST or IGST) is credited.

Discussion

1424.	If a firm believes that some of its debtors may 'default'. It should act on this by making sure that all possible losses are recorded in the books. This is an example of the ………………….convention.
Answer» ANSWER :PRUDENCE

Discussion

1425.	If a firm adopts different accounting principles in two accounting periods it conflicts with the concept of consistency.
Answer» ANSWER :TRUE

Discussion

1426.	If â‚¹920 is received from debtors of â‚¹1,000 in full settlement, Capital will be decreased by â‚¹ 80.
Answer» SOLUTION : TRUE

Discussion

1427.	Identify the value involved in the assumption of going concern.
Answer» Solution :(i) It is because of this concept that a distinction is made between CAPITAL EXPENDITURE and revenue expenditure. (ii) It is because of this concept that FULL cost of an ASSET is nottreated as an expense in the year of purchase itself and the cost is spread over the useful life of the asset by charging depreciation on a suitable basis. (iii) It is because of this concept that outside parties purchase shares and depentures of the ENTERPRISE.

Discussion

1428.	Identify the stakeholder group who would be most interested in the following : (i) The ethical or enviromental activities of the firm. (ii) Whether the firm has a long term future. (iii) The ability of the firm to carry on providing quality products.
Answer» SOLUTION :(i) Social responsibility group (such as ENVIRONMENTAL PROTECTION group). (ii) Potential investors and LONG term creditors. (iii) Public or Customers.

Discussion

1429.	Identified and measured economic events should be recorded in _______ order.
Answer» SOLUTION :CHRONOLOGICAL

Discussion

1430.	IASB upon coming into existence has adopted
Answer» all IAS and SIC. some IAS and SIC. noneof the IAS and SIC. None of these. Solution :all IAS and SIC.

Discussion

1431.	(i) The calibre or quality of the management team is not disclosed in the Balance Sheet. (ii) Advance received from a customer is not taken as income or sales. (iii) Assets are recorded in books at the cost incurred for acquisition of such assets.(iv) Revenue must be recognised when its is realised and expenses are recognised when incurred.(v) Abusiness for which financial statement are prepared is separate is separate and distinct from the owner of the entity.(vi) The assumption is made that the entity in question will remain in business for an indefinite period of time.(vii) Capital contributed by the proprietor is credited to his Capital Account.(viii) Financial statements of the firm are prepared every year on 31st March.(ix) Goods sold o credit to Ramesh - Ramesh 's A/c is debited and Sales A/c is credited.(x) Sales has been made in the year ended 31st March ,2018 but the amount has not been realised . Revenue should be recognised as earned in theyear ended 31st March,2018.(xi) Sale is recognised on the basis of Cash Memo or Invoice. (xii)Closing Stock is valued at lower of cost or market value. (xiii) Harpreet has entered into agreemant whereby he will earn Rs.10lakhs for the services to be provided in the next year . The income should be recognised as revenue in the next year after services have been provided. (xiv) Purchase of pen is treated as expense.
Answer» Solution :[(i) Money Measurement CONCEPT; (ii) REVENUE RECOGNITION Concept; (iii) Cost Concept; (iv) Accrual Concept ; (v) Business Entity Concept ; (vi) Going Concern Concept ; (vii) Business Entity Concept ; (viii) Accounting Period Concept ; (ix) Dual Aspect Concept ; (x) Revenue Recognition Concept ; (xi) VERIFIABLE Evidence OBJECTIVE ; (xii) Prudence Concept ; (xiii) Revenue Recognition ; (xiv) Materiality Concept.]

Discussion

1432.	(i) Rent Received,(ii) Bank Overdraft, (iii) Wages, (iv) Land and Building, (v) Commission Received, (vi) Commission Paid, (vii) Rent Outstanding, (viii) Cash in Hand, (ix) M/s. Gupta Traders (Supplier), (x) Drawings, (xi) Capital, (xii) Prepaid Rent, (xiii) Input IGST, (xiv) Output SGST.
Answer» Answer :[DEBIT Balance: (iii),(iv),(vi),(viii),(x),(xii),(XIII); Credit Balance: (i),(ii),(v),(VII),(ix),(xi),(xiv).]

Discussion

1433.	(i) Classify the followingas capital expenditure, revenue expediture and defered revenue expenditure for a cloth merchant? (a) Preliminary Expenses. (b) Purchase of Furniture. (c) Paymentof Salary (d) Expense paid for construction ofbuliding .
Answer» Solution :(i)(a) Preliminay Expenses :DEFERRED REVENUEEXPENDITURE , (B)PURCHASE ofFurniture : CapitalExpenditure , (c) PaymentofSalary : RevenueExpenditure , (d) Expenses paidfor ConstructionofBuilding: CapitalExpenditure.

Discussion

1434.	Huge loss occurred due to the strike by employees. Will it be recorded ?
Answer» SOLUTION :No. Because only those transactions and EVENTS are recorded in ACCOUNTING which are of a financial CHARACTER and the effect of which can be measured in terms of money.

Discussion

1435.	How will direct payment by a customer affect the Pass Book balance ?
Answer» Solution :A direct payment by a customerwill (i) increases the credit BALANCES as per PASS BOOK, or LTBR (ii) REDUCE the debit balance as per Pass Book.

Discussion

1436.	How many sides does an account have?
Answer» TWO Three one NONE of These Solution :IV

Discussion

1437.	How is Unearned Income shown in the Final Accounts ?
Answer» SOLUTION :Unearned Incomes is SHOWN in the BALANCE Sheet on the Liabilites side under the main head Current Liabilities.

Discussion

1438.	How is Trade Discount recorded in the books of account?
Answer» Solution :TRADE Discount is recorded in THEPURCHASES BOOK and Sales Book but is not recorded in the Ledger Accounts. In the Ledger, only net amount of purchases and sales are ENTERED.

Discussion

1439.	How is Returns Inward shown in the Trading Account
Answer» Solution :RETURNS Inward is SHOWN on the credit side of the Trading Account by way of DEDUCTION from SALES

Discussion

1440.	How is profit or loss of a particular period is ascertained?
Answer» Solution :Profit or loss of a particular PERIOD is ASCERTAINED by preparing a trading and profit or loss account.

Discussion

1441.	How is Cash Discount recorded inthe books of account?
Answer» Solution :CASH Discount Allowed is an expense and is DEBITED to Discount Allowed ACCOUNT. It is closed by transferring it to the Profit and Loss Account. Similarly, Cash Discount Received is an INCOME and is credited to Discount Received Account which is transferred to Profit and Loss Account.

Discussion

1442.	How is accounting influenced byh personal judgements?
Answer» Solution :Accountant has to exercise his personal judgement in RESPECT of various items. For example, it is EXTREMELY difficult to predict with any degree of accuracy the actual USEFUL life of an asset which is needed for calculating DEPRECIATION. The same is true about method of valuation of stock and making provision for doubtful DEBTS.

Discussion

1443.	How does the matching concept apply to depreciation?
Answer» Solution :According to matching concept, all costs which are incurred in an ACCCOUNTING period should be charged against the revenue of that period. Hence DEPRECIATION of current year is charged against the current years revenue. In other words, full cost of the asset is not treated as an expense in the year of its purchase itself RATHER it is spread over its USEFUL life.

Discussion

1444.	How does the Matching Principle apply to depreciation?
Answer» Solution :ACCORDING to the Matching Principle , the expenses for an accounting period are MATCHED against related revenues for the determination of profit . On ACCOUNT of thisprinciple the purchase price of the fixed ASSET is not TAKEN but only depreciation on fixed asset related to the accounting period is taken.

Discussion

1445.	How do we ascertain the financial position of the business?
Answer» SOLUTION :By PREPARING a BALANCE SHEET.

Discussion

1446.	How can Opening Capital be ascertained from incomplete records?
Answer» SOLUTION :Opening Capital can be ascertained by preparing a Statement of Affairs in the BEGINNING of the accounting period.

Discussion

1447.	How can credit sales be determined from incomplete records?
Answer» SOLUTION :By preparing TOTAL Debtors Account, credit sales can be CALCULATED.

Discussion

1448.	How can credit purchases be determined from incomplete records?
Answer» SOLUTION :By prepaing TOTAL CREDITORS Account, credit purchases can be DETERMINED.

Discussion

1449.	Howare the followingitems dealt in Accounting Equation ? (i) Interest duebut notreceived â‚¹500. (ii)Rentreceivedin a dvance â‚¹1,000 (iii)Isurance premium paidin advance â‚¹1,500.(iv) Salaries due tonot paid â‚¹2,000.
Answer» Solution :(i) Interest duebutnot recived shall be added to ASSEST on one side and tothe capital on other side. (II)It willincreasecashonthe assetsside and increase the liabilities. (iii) It will decrease one assets ( CASH) and increase another assets (Prepaid insurance). (iv) Salary beingan expense will be deducted fromthe capitaland beingunpaid will be added to liabilities.

Discussion

1450.	How can Closing Capital be ascertained from incomplete records?
Answer» Solution :Closing Capital can be ascertained by PREPARING a Statement of AFFAIRS at the END of the accounting PERIOD.

Discussion

Explore topic-wise InterviewSolutions in .

If Depreciation reduces, profits and Value of fixed assets and thus, the capital of the owner, why do businesses charge Depreciation?

If Depreciation reduces profit, reduces Book value of assets and also reduces capital of the proprietor, then why do enterprises provide Depreciation ?

If debit side of a Trading Account is bigger, does it mean the enterprise has earned profit or incurred a loss? Why?

If debit side of Profit and Loss Account is bigger than credit side, does it mean net profit or net loss ? Why?

If credit side of a Trading Account is bigger than the debit side, does it mean the enterprise has incurred loss or earned profit ? Why?

If credit side of Profit and Loss Account is bigger than the debit side, does it mean net loss or net profit ? Why?

If Closing Stock is given outside the Trial Balance, where is it shown in the Finanical Statements or Final Accounts ?

Ifcapitalof a business is â‚¹1,40,000 and liabilities are of â‚¹80,000, calcluate the total assets of the business.

If Closing Stock appears in the Trial Balance , it means

Ifcapitalof a business is ₹1,40,000 and liabilities are of ₹80,000, calcluate the total assets of the business.

If both debit and the credit aspect of a transaction are recorded in the cash book itself , it is called

If Capital and Revenue Expenditure are not distinguished

If balance in the bank statement shows ₹ 3,000 (Dr.) and there are deposits of ₹ 800not yetcredited and unpresented cheques totalling ₹ 500, the balance in the Cash Book should be

If both Adjusted Purchases and Closing Stock are given in the Trial Balance, where are the two accounts shown in the Final Accounts ?

If amount of any known liability is not known, it is accounted in the Books of Account as

If amount of any known liability is known, it is accounted in the Books of Account as

If a transactions has theeffect of decreasingan asset, is thedecrease recorded as a debit or as a credit? If thetransaction has the effect of decreasing a liability , is thedecrease recorded as a debit or as a credit ?

If 'Adjusted Purchases' and 'Closing Stock' are given in the Trial Balance, will you transfer 'Closing Stock' to Trading Account? Given reason

If accounting information is based on facts and it is verifiable by documents ithas the quality of ………

If adequate maintenance expenditure is incurred, depreciation need not be charged.

If a Trial Balance does not agree, the difference must be entered in (i) the Profit and Loss Account, (ii) a Suspense Account, (iii) a Nominal Account and (iv) the Capital Account. Give reasons.

If a transaction is properly analysed and recorded:

If a partner takes goods for personal use or goods are given as charity, why Input GST (CGST and SGST or IGST) Account is credited?

If a firm believes that some of its debtors may 'default'. It should act on this by making sure that all possible losses are recorded in the books. This is an example of the ………………….convention.

If a firm adopts different accounting principles in two accounting periods it conflicts with the concept of consistency.

If â‚¹920 is received from debtors of â‚¹1,000 in full settlement, Capital will be decreased by â‚¹ 80.

Identify the value involved in the assumption of going concern.

Identify the stakeholder group who would be most interested in the following : (i) The ethical or enviromental activities of the firm. (ii) Whether the firm has a long term future. (iii) The ability of the firm to carry on providing quality products.

Identified and measured economic events should be recorded in _______ order.

IASB upon coming into existence has adopted

(i) Rent Received,(ii) Bank Overdraft, (iii) Wages, (iv) Land and Building, (v) Commission Received, (vi) Commission Paid, (vii) Rent Outstanding, (viii) Cash in Hand, (ix) M/s. Gupta Traders (Supplier), (x) Drawings, (xi) Capital, (xii) Prepaid Rent, (xiii) Input IGST, (xiv) Output SGST.

(i) Classify the followingas capital expenditure, revenue expediture and defered revenue expenditure for a cloth merchant? (a) Preliminary Expenses. (b) Purchase of Furniture. (c) Paymentof Salary (d) Expense paid for construction ofbuliding .

Huge loss occurred due to the strike by employees. Will it be recorded ?

How will direct payment by a customer affect the Pass Book balance ?

How many sides does an account have?

How is Unearned Income shown in the Final Accounts ?

How is Trade Discount recorded in the books of account?

How is Returns Inward shown in the Trading Account

How is profit or loss of a particular period is ascertained?

How is Cash Discount recorded inthe books of account?

How is accounting influenced byh personal judgements?

How does the matching concept apply to depreciation?

How does the Matching Principle apply to depreciation?

How do we ascertain the financial position of the business?

How can Opening Capital be ascertained from incomplete records?

How can credit sales be determined from incomplete records?

How can credit purchases be determined from incomplete records?

Howare the followingitems dealt in Accounting Equation ? (i) Interest duebut notreceived â‚¹500. (ii)Rentreceivedin a dvance â‚¹1,000 (iii)Isurance premium paidin advance â‚¹1,500.(iv) Salaries due tonot paid â‚¹2,000.

How can Closing Capital be ascertained from incomplete records?